France

Caisse de Refinancement de l’Habitat is today (Monday) increasing a 5% October 2013 issue by Eu410m at a level described as “aggressive” by a syndicate official on the deal. Meanwhile, Banco Espírito Santo is expected to hit the market before mid-week holidays in the US and France.

Compagnie de Financement Foncier was able to increase the size of a long two year deal yesterday (Wednesday) afternoon and price it at the tight end of guidance, despite coming at the tightest level for a covered bond benchmark this year. Meanwhile, CRH is tapping a long dated deal in the wake of Dexia Municipal Agency earlier this week.

Compagnie de Financement Foncier has closed books on a Eu1.5bn long two year deal, which will be the shortest dated and tightest benchmark covered bond to be priced this year. Meanwhile, Corealcredit will shortly close books on a four year mortgage Pfandbrief, and levels wider than where a Bankinter benchmark was priced yesterday (Tuesday) are being whispered for a forthcoming Caja Madrid cédulas issue.

Dexia Municipal Agency is today (Tuesday) increasing its September 2016 obligations foncières by Eu750m at a level 5bp inside the re-offer spread on the initial issue.

Moody’s yesterday (Thursday) placed on review for possible downgrade the bank financial strength rating and long term issuer rating of BNP Paribas.

CIF Euromortgage priced the tightest 10 year benchmark of the year yesterday (Tuesday) afternoon, a Eu1.25bn obligations foncières deal that the issuer told The Cover highlighted the attractiveness of covered bonds versus government guaranteed funding.

A Eu1bn five year Caja de Ahorros del Mediterráneo cédulas hipotecarias on Friday concluded a difficult week in the covered bond market to the issuer’s and the leads’ satisfaction. This week looks set to be quiet again, with two or three issues expected, although market participants were this (Monday) morning more relaxed about the outlook than they were last Monday.

Crédit Mutuel-CIC has set up a second covered bond issuer, but an official at the French mutual group told The Cover that the new entity will not be issuing publicly.

A crisis at Crédit Foncier de France and the imminent arrival of the euro called for action to support French lenders in the late 1990s. The French establishment responded by drawing on inspiration from northern Europe and a 19th century instrument closer to home.

Obligations foncières passed their biggest test in the wake of Lehman Brothers’ collapse. And although the structured issuance of French national champions outperformed those based on the law of June 25, 1999, they, too, could soon benefit from being given a legislative blessing.

Despite its obvious attractions, the obligations foncières framework proved too inflexible for several of France’s lenders. But this did not prevent them from entering the covered bond market, as BNP Paribas led a second revolution in French covered bonds.

Today is the 10th anniversary of the first obligations foncières of the modern era, launched by Compagnie de Financement Foncier on 6 October 1999. In this special report, we look back on the origins, growth and future of the French covered bond market.